The Financial Conduct Authority (FCA) has highlighted the use of consultant lists by private medical insurance (PMI) providers as a method of ensuring products provide value to customers.
The regulator used the example to illustrate alternative ways for providing fair value other than price and loss ratios in its letter to general insurance and pure protection firms.
Products with controlled consultant lists which are typically fee-assured, often known as guided care options, have been proving increasingly popular with customers.
Insurers including Aviva, Bupa and The Exeter have been launching products with such lists.
Explaining how firms should address fair value as part of implementing the Consumer Duty, it noted products may contain a service that is of benefit to customers, the cost of which may also be factored into the fair value assessment.
The FCA cited the example of a PMI provider which carried out research that found approximately 50% of people with health insurance said they would not know how to find the right consultant if they needed treatment, and that 90% wanted their health insurer to assist.
The PMI provider introduced a new category of medical consultant to support customers in making informed choices about their healthcare, these consultants were rated good or excellent by more than 95% of the PMI provider’s patients, the FCA noted.
“Claims information demonstrated that customers treated by these consultants had shorter hospital stays on average than those treated by other consultants,” it said.
“Customers also needed fewer consultations and were also less likely to have a procedure, which meant that unnecessary procedures may have been avoided.
“The costs of providing this service and any savings in claims that could be shown to be directly attributable to the service that are passed on to the customer, may be factored into the product’s fair value assessment,” the FCA concluded.
The FCA did not name the insurer it was referencing, but the figures appear to match those cited by Bupa when launching its Platinum list of consultants last year.
